Front_Office_Operations

Chapter 6– Yield management, statistics and reports

Guest statistics

2.3 Average guest expenditure

Question: How much do guests spend, on average during their stay?

Which categories of guest (corporate, travel agency, groups) and/or which guest nationalities spend more or less, on average, during their stay?

Purpose: This information can be used to identify the most profitable guest 'segments', so that the hotel can maximise revenue by seeking more of their business (through marketing and sales targeting) and by giving them reservation priority over less profitable segments, where relevant.

Calculation: This can be simply calculated, using the mean average.

Total number of sleeper night sold in a given period / Number of guests

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Chapter 6– Yield management, statistics and reports

Guest statistics

2.4 Source of booking

Question: Where do the hotel's bookings come from: corporate, travel agency, tour operator, individual/personal booking or chance guests'

Purpose: This information can be used to Identify which sources offer the highest proportion of bookings and the highest revenue (when used to break down average expenditure statistics), so that the hotel can target Its marketing to the most effective sources, and plan facilities and services for the needs of different types of guest (e.g.. corporate, personnel or chance).

Calculation: Source of booking data should be collected on reservation, and can be broken down into relevant categories by a computerised system or by hand. The number of guest nights revenue earned) from different segments can then be expressed as a percentage of the totai and shown as a bar or pie chart.

Segment %	=	Number of guests (or revenue) from booking source x 100
		Total number of guests (or revenue)

A computerised system may also allow you to call up a list of the 'Top 10' customers each segment, as measured by number of guest nights and/or total expenditure in a given period.

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Chapter 6– Yield management, statistics and reports

Occupancy and revenue statistics

3.Occupancy and revenue statistics

3.1Measuring business performance

3.2Occupancy statistics

3.3Revenue, yield and profit statistics

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Chapter 6– Yield management, statistics and reports

Occupancy and revenue statistics

3.1 Measuring business performance

Once you have gathered the information, you can compare:

●actual performance with planned or forecast performance, to identify where the business did better than expected, where it 'fell short' - Or where plans and forecasts need to be adjusted

●this year's performance with last/past year's performance, to identify whether the business - and/or business conditions - are getting better or worse.

●the performance of your hotel against that of competitors, or other hotels in your group, or 'benchmark' hotels that you measure yourself against, or hospitality industry averages.

●the performance of one shift or team against another, to see which are deserving of extra reward, which are 'falling short' and need extra training or motivation, and so on.

So what measures might a hotel use to evaluate its performance? The most common ones are as follows.

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Chapter 6– Yield management, statistics and reports

Occupancy and revenue statistics

3.1 Measuring business performance continued…

So what measures might a hotel use to evaluate its performance? The most common ones are as follows.

	Measure	Comment
		Most hotels derive the main part of their earnings and profit from the sale of
	Occupancy	accommodation, so a key measure of performance is how fully the hotel is occupied. It is
		expressed as a percentage: the number of rooms sold compared to the total number of
	statistics	rooms (room occupancy); the number of guests compared to the total possible number
		of guests (guest or sleeper occupancy); and the income from occupancy compared to
		the total possible income (income occupancy).
		Hotel performance can be expressed via various statistics to do with the occupancy and
	Room	revenue achieved from the rooms. Such measures may include: room and guest/sleeper
	statistics	occupancy statistics; and the average rate at which rooms are being sold; revenue per
		room (or room yield); and profit per room.
		As discussed earlier, yield measures the hotel's success in achieving maximum
	Yield	occupancy at the highest room rate possible. It is measured as revenue actually
	percentage	achieved from the sale of rooms, as a percentage of the possible maximum revenue.
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Chapter 6– Yield management, statistics and reports

Occupancy and revenue statistics

3.2 Occupancy statistics

Room occupancy percentage

Room occupancy is the percentage of rooms occupied in a given period.

Room occupancy =

Room sold/ occupied X 100

Total room available

On this showing, the hotel isn't doing too badly - although not as well as it would probably like, given the aim of 100% occupancy. The hotel has sold a good proportion of its rooms.

In general, the figure for 'total rooms available' is the number of rooms in the hotel: adjustments tend not to be made for rooms which are temporarily 'out of service' (e.g.. for maintenance, decoration or staff use), as this gets in the way of meaningful comparisons. It is important to know if 'out of service' or non-revenue-earning rooms are impacting on the hotel's performance.

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Chapter 6– Yield management, statistics and reports

Occupancy and revenue statistics

3.2 Occupancy statistics continued…

Sleeper occupancy percentage

Sleeper or bed occupancy percentage is the number of guests, as a percentage of capacity.

Bed occupancy

=

Number of beds / Sleepers X 100

Total possible beds / sleepers

This is a much less impressive figure: although the hotel has sold a good proportion of its rooms, a significant number of the twins and doubles have been let for single occupancy (i.e. for one person) wasting the potential sale of the other bed.

This picture can be confirmed by calculating the double or multiple occupancy percentage:

Double occupancy =

Double / twins let 2 persons X 100

Total number of double / twin room

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Chapter 6– Yield management, statistics and reports

Occupancy and revenue statistics

3.2 Occupancy statistics continued…

So less than half of the double-occupancy rooms are being let accordingly: the other half are wasting the potential sale of the other bed. If the hotel has a 'per room' tariff, rather than a 'per person' tariff, the hotel isn’t losing out on a room charge for the second person. But single occupancy also means a single meal in the restaurant, single bar charges and so on, the hotel is missing out on potential revenue overall.

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Chapter 6– Yield management, statistics and reports

Occupancy and revenue statistics

3.3 Revenue, yield and profit statistics

Average room rate (ARR) or average daily rate (ADR)

The average room rate (ARR) or average daily rate (ADR) shows how much a room is being sold for across the hotel. Using the mean average:

ARR/ADR =	Total room revenue on a given day (usually excluding VAT and sales tax)

Total room sold

Why is this useful?

●It gives a quick indication of how much single occupancy and discounting (rooms let at less than full rack rate) is taking place, because this lowers the ARR.

●ARR can be used to calculate lost room revenue, by multiplying the number of unsold rooms by the average rate.

●ARR can be compared with a known breakeven figure (the rate at which the hotel is covering its costs on a room), to ascertain whether the rooms division has made a profit on a given night

One limitation of AR figures is that they don't really allow to compare hotel's performance with that of another hotel, or this year's performance with last year's.

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Chapter 6– Yield management, statistics and reports

Occupancy and revenue statistics

3.3 Revenue, yield and profit statistics continued…

Yield (percentage revenue achieved)

Yield percentage / percentage revenue achieved or income occupancy percentage - expresses the room revenue actually earned by the hotel as a percentage of the maximum possible revenue it could have earned (by 100% occupancy at full rack rates).

Yield

=

Total room revenue (rooms sold x rates charged)

x 100

Potential room revenue (total rooms x full rack rates)

Yield measures both the hotel's success in maximising occupancy and in securing rates as close to full rack rate as possible.

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